Disclaimer: The opinions expressed in this article solely reflect the views of the author, not of his organisation.
Warsaw is possibly the “best in class” in Europe regarding diversification of its energy supplies. The country which used to be heavily dependent on the single supplier – Russia - is currently able to receive more than 90 % of its imported gas supplies via reverse-flows from Germany or in the form of LNG.
Poland can import up to 5.5 bcm/year of natural gas from Germany via virtual reverse flow applied to the Yamal-Europe pipeline and an additional 2.7 bcm/year of Germany-Poland physical reverse capacity is available at the Mallnow compressor station.
The Polish LNG terminal in Swinoujscie has been operational since 2016, with the initial re-gasification capacity at 5 bcm/year which will be soon extended to 7.5 bcm/year. As well as this, PGNiG also plans to build a 10 bcm/year pipeline connecting Poland to Norway’s gas fields.
The country’s gas market is also getting increasingly liquid and starting to resemble “mature” gas hubs in Western Europe. In this respect Poland compares favourably to other countries in Eastern Europe such as the Baltic EU Member States, Bulgaria, Romania or even Slovakia. One reason for the increased liquidity is a significant improvement in the level of interconnectivity and new reverse flow options that have been created over the last few years, allowing Poland to source gas from neighbouring countries situated outside traditional east-west energy supply corridors.
In this region, the Czech Republic has already offered a good example of how connectivity can quickly turn a relatively isolated and illiquid market into a well-functioning hub and Poland will follow suit. New infrastructure has already made possible gas deliveries to the east (Ukraine) and south (Czech Republic and Slovakia) thus transforming Poland into an emerging energy hub.
Construction of a new energy infrastructure has helped Poland to emerge as a competitor to Germany’s Nord Stream and this is good news for the EU’s single gas market and European customers.
New infrastructure and supply dynamics put Polish energy companies in a stronger negotiating position vis-à-vis key energy exporters like Russia but also the U.S. In August 2017 Polish Minister of Foreign Affairs Witold Waszczykowski stated that Poland is “inclined to import gas from the United States on terms that are competitive as compared to gas from other sources, such as, Qatar or Russia.” This statement might be a first step towards de-politisation of Polish gas market when energy supplies are measured by its’ economic value and not by its’ origins or political/geo-political considerations.
Shell noted that “security of supply issues in some European countries are created or exacerbated by the very slow adoption of the European Regulatory framework”. Well-functioning market is the “best way to deliver security of supply,”. In fact, non-compliance with EU “rules of the game” and neglect of legitimate interest of key market players are not in Poland’s national interest. Now it is the time for Poland to stop holding “regulatory reins” so tight and let the energy market work to the country’s own benefit. All the ingredients are there: infrastructure is in place, there are several sources of gas supply and a lot of neighbouring countries are willing to connect to the Polish gas network. Furthermore, two of the world’s largest natural gas producers – the U.S. and Russia – are competing for access to the Polish gas market.
Share your insights and join the conversation: Where do you see the Polish gas industry in the next 5 years? Leave your comment below.
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